Morgan Stanley Shares Plummet

Reuters

Morgan Stanley shares fell as much as 7.8 percent Friday because of concerns about its exposure to European banks.

Shares of the second-largest U.S. investment bank were down 6.7 percent at $14.08, having earlier fell 7.8 percent to an intraday low of $13.91.

Comparable financial stocks were also down. Goldman Sachs Group Inc fell 2.6 percent to $30.58 and the NYSE Arca Securities Broker/Dealer Index, which includes Morgan Stanley, was down 3.4 percent.

Morgan Stanley shares hit their lowest level since December 2008 last week after finance blog Zero Hedge reported the bank was at risk because of its exposure to French banks.

Morgan Stanley has zero net exposure to France, including French sovereign debt and French banks, a source familiar with the matter said Friday.

Nonetheless, investors appeared to be reacting to fear signals in the credit markets related to Morgan Stanley.

The cost of insuring the bank's five-year bonds against default has spiked in recent days, and is almost three times what it was on June 30.

Its credit default swaps were more expensive than some European lenders such as Societe Generale, which outlined a plan to sell assets to raise capital last month, and Bank of America Corp , which has been plagued by investor concerns about its legal risk and capital adequacy, said Markit analyst Oatis Casey.

``Morgan Stanley CDS are among the widest of its U.S. peers in CDS trading and significantly wider than French banks,'' said Casey. ``In part, it's hurt by perception because the markets are jittery.''

A higher swap price indicates that the market perceives a higher risk.

Credit default swaps are very thinly traded compared to equities, but many stock investors still view the product as an important measure of risk because they portended problems leading up to the financial crisis.

``Investors are still worried about Morgan Stanley's exposure to Europe and that's going to weigh on the stock,'' said Derek Pilecki, founder of Tampa, Florida-based Gator Capital Management, which operates long-short equity strategies in financial stocks. ``I think this will pass, but it may take some time.''

Morgan Stanley is likely to offer detailed information about its European exposure when it reports third-quarter results next month, analysts said. Wall Street has cut its earnings expectations for large U.S. banks sharply in recent weeks, due to declining asset values, low interest rates and a weak business environment.

Analysts now expect Morgan Stanley to report third-quarter earnings per share of 36 cents, on average, according to Thomson Reuters I/B/E/S, down from 47 cents a month ago. (Reporting by Lauren Tara LaCapra. Editing by Robert MacMillan)

Pending Home Sales Fall Less Than Expected in August

Pending sales of existing homes fell less than expected in August despite rock-bottom mortgage rates, underscoring the difficulties policymakers face in helping the struggling housing sector.

The National Association of Realtors said on Thursday that its pending home sales index, based on contracts signed in August, was down 1.2 percent to 88.6, its lowest since April.

Analysts polled by Reuters ahead of the report were expecting sales to decline 1.8 percent.
Hurricane Irene, which battered the Northeast at the end of the month, was likely a factor in the decline. Sales in the Northeast fell 5.8 percent.

But the NAR's chief economist Lawrence Yun said tight credit was also holding back the overall housing market.

Banks clamped down on credit when the financial crisis struck in 2007 and credit conditions remain restrictive for many households.

"The housing market is basically stuck at a low level. I don't see any evidence that sales will fall much further, but there is no rebound yet either," said Jim O'Sullivan, chief economist at MF Global in New York.

The U.S. Federal Reserve slashed interest rates during the crisis and has continued to break out new tools to try to get banks to lend more to help the economy recover from recession.
Last week it unveiled measures to boost lending to home-buyers but analysts caution that the level of mortgage rates is not the main hurdle to buying.

The Fed's low interest rate policies have helped push 30-year mortgage rates to their lowest since at least 1971, when mortgage finance provider Freddie Mac started tracking them. This week they hit a record low 4.01 percent.

Many economists are skeptical attempts to lower rates will help much because millions of Americas owe more on their mortgages than their homes are worth, which can effectively chain them to their properties while also preventing them from refinancing to lower their monthly costs.

The White House is also trying to work out a plan to help the depressed sector. The administration is working with the Federal Housing Finance Agency, a regulator, to try to expand a program that helps distressed borrowers with government-backed loans.

Some other government props for the sector, however, are set to fall away. At the end of this month, the size of the loans federal housing agencies can back will fall and next year government-controlled mortgage finance companies Fannie Mae and Freddie Mac will begin to raise fees on the loans they purchase.

US Stocks Waver In Midday Trading

U.S. stocks bobbed in and out of positive territory as investors continued to track developments on Europe's debt crisis.

The Dow Jones Industrial Average gained 34 points, or 0.3%, to 11224 in midday trading. The Standard & Poor's 500-stock index was flat at 1177, while the Nasdaq Composite was off two points, or 0.1%, to 2545.

If stocks can finish with gains, they will extend the recent winning streak to four days, though some bulls have been discouraged by the market's inability to hold gains throughout the trading day. Wednesday morning, the Dow gave up gains of more than 125 points before bouncing back.

The moves came on a day when Finland voted to approve changes to the euro-zone bailout fund, after leaders raised concerns earlier this month that they would demand collateral as a precondition for participation. Germany votes on the changes Thursday. The changes need to be approved by all 17 euro-zone members to take effect.

"The market gets pumped up on hope, and then it gets the rug pulled out from under it," said Keith Springer, president of Springer Financial Advisors. "We're all hoping that the European leaders can create a backstop here, but we all know that the backstop is just short term. They're just kicking the can down the road."

Italy's business confidence index plummeted in September in response to slowing global demand and after the government announced tax-heavy austerity measures to fix public finances, with the reading suffering its biggest monthly drop since the fall of 2008.

Stocks in Europe finished near the lows of the day. The Stoxx Europe 600 fell 1.1%, while the French CAC-40 index lost 0.9%. Asian bourses were mixed, with Japan's Nikkei Stock Average edging up 0.1% but China's Shanghai Composite shedding 1%.

"This is not a market that has a lot of conviction," said Howard Ward, chief investment officer for the Gamco Growth Fund. "When you look at the numbers on retail outflows from equity funds, we can see the little guy has pulled his money from stocks. He's not waiting around for fear of the bottom falling out of this market."

With markets as volatile as they have been, "the biggest threat to the economy is financial markets themselves. This market beats people up too much," Mr. Ward said. "That kind of volatility is not welcomed by most investors."

Dragging on the downside Wednesday were materials stocks. Alcoa fell 2.5% to lead the Dow decliners as the prices of some commodities faltered. Alpha Natural Resources and Cliffs Natural Resources were the biggest losers on the S&P 500, dropping 8% and 6.9% respectively.

Copper prices dropped more than 5%, while crude oil fell 2.4% to below $83 a barrel. Gold futures slipped to about $1,630 an ounce.

Pulling on the upside were relatively defensive stocks, led by telecommunications and utilities stocks. AT&T and Verizon Communications gained 1% each.

Amazon.com climbed 4.9% after the online retailer unveiled its Kindle Fire tablet, which is to compete with Apple's iPad. Apple added 0.6%, while Barnes & Noble, which owns the Nook e-reader that competes with another version of the Kindle, tumbled 13%.

In economic headlines, durable-goods orders during August slipped 0.1%, the second drop in three months as manufacturers struggled with the tough economy, disappointing hopes for a 0.2% rise. The drop followed a 4.1% surge in July and a 1.1% decline during June.

The number of mortgage applications filed in the U.S. last week rose 9.3% from the prior week, as interest rates continued to slide following the Federal Reserve's latest stimulus measure. Refinance activity climbed 11%.

The dollar fell against the euro and the yen, while the yield on the 10-year Treasury rose to 2.0546%.

Among other stocks, Jabil Circuit surged 8.7% to lead S&P 500 components after the electronics contract manufacturer reported a big gain in profit and issued a stronger-than-expected forecast.

Family Dollar Stores slipped 0.1% after the discount retailer approved the buyback of up to $250 million of its common stock.

Accenture gained 2.7% after the outsourcing and consulting company topped earnings and revenue estimates and providing a favorable outlook.

Paychex rose 1.9% after the payroll services company topped fiscal first-quarter earnings and revenue estimates, and affirmed its full-year outlook.

Copyright © 2011 Dow Jones Newswires

TECH STOCKS: Chips Lead Techs Lower, But Amazon Shines

SAN FRANCISCO (MarketWatch) -- Technology stocks slid into the red as falling semiconductor shares weighed the sector down, offsetting gains in shares of Amazon.com Inc., which got a lift from its rollout of a new tablet.

The chip retreat was led by Advanced Micro Devices Inc. (AMD), which fell 5.2% to close at $6.15, while LSI Corp. (LSI) lost 5.6% to close at $5.44 and SanDisk Corp. (SNDK) declined 3.3% to close at $41.78.

In a note, J.P. Morgan analyst Christopher Danely wrote that "most investors we met with last week indicated they are waiting for another round of estimate cuts in October and a resolution in the European financial crisis before buying semiconductor stocks."

However, Danely also said that in his view, "semiconductor stocks have bottomed and that investors should buy before the likely 1Q12 recovery."

That view apparently was not widely shared by investors Wednesday, as the Philadelphia Semiconductor Index (SOX) slid 2.9%. The index has lost more than 13% since Jan. 1.

But the tech sector got a lift from Amazon.com (AMZN), which was trading up 2.5% to close at $229.71 as the company unveiled its new anticipated tablet.

The Nasdaq Composite Index (RIXF) slipped 2.2% to close at 2,492.

Jabil Circuit Inc. (JBL) stock rose 8.4% to close at $18.84 after the contract manufacturer reported upbeat earnings and a stronger-than-expected outlook.

Shares of Accenture PLC (ACN) added a fraction to close at $53.83 after the IT services and consulting firm reported a jump in profit.

IT services and distribution firm Synnex Corp. (SNX) also saw its stock rise 9.4% to close at $27.26 after the company posted strong quarterly results.

Among the notable decliners was Juniper Networks Inc. (JNPR), which slipped 5.4% to close at $18.85.

In a note, FBN Securities analyst Shelby Seyrafi initiated coverage of the stock with a sector-perform rating, saying Juniper "has many new product cycles beginning, but service-provider spending is slowing while Cisco is becoming more aggressive."

Seyrafi also initiated coverage of Cisco Systems Inc. (CSCO) with an outperform rating. Cisco shares fell 1.4% to close at $15.84.

Copyright © 2011 Dow Jones Newswires

Fed's Fisher Slams Twist Move As Ineffective

WASHINGTON - Dallas Federal Reserve Bank President Richard Fisher slammed the central bank's decision last week to extend the maturity of its balance sheet dubbed Operation Twist, calling it "jujitsu on the yield curve" that is 'likely to prove ineffective" and could actually work against job creation. In a speech in Dallas, Fisher said his regular business contacts gave him an "earful" of arguments against a twist plan before the Fed meeting. The executives argued it would scare consumers, hurt banks and pension funds and make the Fed's eventual exit from ultra-easy monetary policy more difficult, he said. Fisher was one of three Fed regional bank presidents who voted against the Twist plan. Fisher said he did support the Fed's decision to reinvest maturing agency debt and agency mortgage-backed securities into agency MBS as "a tactical way to provide limited assistance to the mortgage market at little cost."

Copyright © 2011 MarketWatch, Inc.

Geithner to Europe: Day Late, Euro Short

Treasury Secretary Timothy Geithner said Europe is trying to move forcibly to fix its debt crisis, reports Dow Jones Newswires, the sister company to FOX Business.

"I think they are moving--they are certainly trying to signal more commitment--to put more force behind their efforts to try to deal with the financial crisis they are facing," Geithner said after touting President Barack Obama’s jobs bill at a United Parcel Service (UPS) package-handling facility.

But the problem won’t be solved by creating more liquidity to buy bad bonds or recapitalize banks.

The problem is moribund, state-run economies. Talk now of blowing out the European Union’s rescue fund to quadruple the size of its original $600 billion means Germany and France will have to do more to back up an even bigger fund.

And that, as I warned you two months ago, means France and Germany could put at risk their sovereign debt's Triple-A ratings. Germany backs 27% of the present $600 billion EU rescue fund, France 20%, Italy 18% and Spain 12%.

Meanwhile, Greece is backstopping just 2.8%, Portugal 2.5% and Ireland 1.6%.

Member countries of the euro zone backstop the fund, which lends euros to member countries. EU officials are now talking about increasing the size of the fund via borrowings in the debt markets in conjunction with the European Central Bank.The ECB is fast becoming Europe's bad bank.

David Beers, head of S&P's sovereign rating group, told Reuters these options could have "potential credit implications in different ways," including for leading euro zone countries, such as France and Germany.

But the problem is this. Greece has about 12 million people with about $300 billion in debt, and as economist Nouriel Roubini says its problem is a "chronic lack of competitiveness." Anywhere from 70% to 80% of Greece’s private-sector companies are owned by the Greek government, state-owned enterprises staffed with political cronies exacting their own payback from getting officials elected. Unions run dozens of companies too. All of this means any bailout of Greece will founder if its economy is not restructured from the ground up. A 2-trillion-euro rescue fund would likely let leaders just delay making structural changes.
The only way to that would be to kick Greece out of the European Union, and let it devalue its way out of its own homegrown crisis, as Argentina did during the late ‘90s. Argentina was shut out of the debt markets until it got its act together. As Greece effectively is now, with yields spiking higher to 28% on its bonds.
Stabilizing Europe – and thus ending the market volatility here – will rest on an emerging plan with three pillars. First, European leaders may increase the size of the Euro zone rescue fund to 2 trillion euros, or roughly four times the current size, via even more borrowings. That fund would backstop the European Central Bank, which could use the funds to recapitalize banks or buy distressed bonds from Germany or Italy.

Next, Greece could see a 50% writedown of its sovereign debt.

On paper, the plan sounds solid, but it won’t be simple. For one thing, European leaders disagree strongly on the details. German officials are balking at letting Germany backstop even more debt for an even bigger EU rescue fund, as officials there say using leverage violates EU treaties launching the Euro zone.

And ECB officials also are squeamish about buying sovereign debt. China has been talked about as an investor, but if the ECB won’t buy Euro bonds, why should China?

Next, a 50% debt haircut falls short of the 80% many observers think Greece needs.

Of course, there’s a bright side: the European rescue plan doesn’t tap the U.S. in a big way. Even so, that could easily happen again—the Federal Reserve lent European banks more than $600 billion during the financial crisis of 2008.

Overall, the Euro zone banks need to raise a big $1.7 trillion to $2.3 trillion of funds in the next three years to help with debt rollovers.

Goldman Sachs estimates Europe’s 38 biggest banks might need anywhere from $41 billion to as much as $126 billion in extra capital to cope with Greek, Irish, Portugese government bonds and losses on Italian and Spanish government debt.

Question: Can the ECB print and buy several trillion euros worth of bonds without unleashing inflation? Can the ECB shut down insolvent banks anywhere in the Euro zone, which are hotly contentious political decisions because the EU has no Federal Deposit Insurance Corp.?

HSBC's Flint to take reins at global bank lobby IIF

WASHINGTON (Reuters) - Douglas Flint, the chairman of European banking powerhouse HSBC , will take over as chairman of the global banking lobby Institute of International Finance when current chairman, Deutsche Bank CEO Josef Ackermann, steps down next year, banking sources said on Saturday.

"Flint will succeed Josef Ackermann next year," a senior banking source said.

Flint has been chairman of HSBC, Europe's biggest bank, since December. He was promoted to chairman from finance director after a boardroom takeover battle last year led to the departure of the bank's then-CEO and Chairman Stephen Green.

The IIF represents and lobbies for over 450 banks and other financial firms across more than 70 countries.

Led by its managing director Charles Dallara, it has played a significant role representing banks in talks about rescuing Greece, helping get the private sector to agree to take a 21 percent loss on their holdings of Greek government bonds. But that deal has not been finalized, and some expect the bondholders to have to agree to a bigger loss.

Flint, a Scot, joined HSBC as finance director in 1995 and in his 15 years in that role built up a reputation as an expert on complex accounting issues and a straight-talking and reliable voice on regulation.

Seen as a safe pair of hands and far removed from the flash world of investment banking, the 56-year old has urged greater regulator coordination and said the quality of supervision needs to improve.

(Washington newsroom +1-202-898-8310)

BofA sued by shareholder over $10 billion AIG loss

By Grant McCool

NEW YORK (Reuters) - A Bank of America Corp shareholder sued the bank on Friday for what he said was a failure to disclose it potentially owes more than $10 billion to American International Group Inc in connection with mortgage-backed securities.

The lawsuit, filed in U.S. District Court in Manhattan, seeks class action status on behalf of purchasers of Bank of America stock between February 25 and August 5 this year.

AIG, which was bailed out by the government in the 2008 financial crisis, suffered losses of more than $10 billion from the securities, known as RMBS, between 2005 and 2007. The losses occurred after Bank of America and two companies it bought -- Countrywide Financial Corp and Merrill Lynch -- and subsidiaries sold AIG more than $28 billion in RMBS.

"Throughout the class period, defendants repeatedly informed investors about the claims of other entities for RMBS losses but not about the massive losses suffered by AIG," the lawsuit said.

Lawrence Grayson, a spokesman for Charlotte, North Carolina-based Bank of America, said he had not seen the lawsuit and declined to comment.

The court document said the shareholder losses occurred on August 8 as Bank of America's stock dropped more than 20 percent to $6.51 per share from $8.17 per share after AIG sued the bank in New York state court seeking to recover the RMBS losses.

"This decrease was a result of the artificial inflation caused by the defendants' misleading statements coming out of the price," Friday's lawsuit said.

In a footnote, the court document adds that the plaintiff, shareholder David Lawrence, "asserts only that BofA should have disclosed AIG's losses and potential claims to investors and takes no position on whether those claims will ultimately be found to have merit."

Lawrence asks the court to declare the lawsuit a class action under anti-fraud provisions of federal securities law and seeks unspecified damages for all members of the class.

The case is David Lawrence et al v Bank of America Corp, U.S. District Court for the Southern District of New York, No. 11-6678.

(Editing by Steve Orlofsky)

Bailout Fund Won't Solve All Europe Woes: IMF Aide

WASHINGTON -- Calls for a "gigantic" increase in the size of Europe's bailout fund are unreasonable, because the fund will not solve all of the region's problems, Antonio Borges, head of the International Monetary Fund's European division, said Friday. The Group of 20, composed of the world's top economies, has been pressing Europe to leverage the size of the European Financial Stabilization Fund in concert with the European Central Bank. "The idea that we should leverage the EFSF to the hilt, $2 trillion...is not serious in our view," Borges said at a news conference. The IMF official added more substance to IMF chief Christine Lagarde's argument that financial markets are ignoring Europe's progress on lowering its debt burden. He said that Spain has made "remarkable" progress to address its debt levels. "It is a great pity this is not recognized by markets and to a certain extent the same in Italy," where the public accounts have never been as good as they are now, he said. "We are acting to make sure current fears that exist with respect to Italy and Spain do not spread to other areas of the continent and to the financial system," Borges noted.

Copyright © 2011 MarketWatch, Inc.

Imperial Tobacco Group Buys Back 175,000 Shares

LONDON -(Dow Jones)- Imperial Tobacco Group PLC (IMT.LN) Thursday said it purchased 175,000 ordinary shares at an average price of 2037.536 pence per ordinary share on Sept. 22.

MAIN FACTS:

-Purchased shares will all be held as treasury shares.

-Shares on Thursday closed at GBP20.17.

Copyright © 2011 Dow Jones Newswires

Running Out of Room to Store Gold Supplies (BCS, DB, JPM, BCO, GLD, IAU, HBC)

Demand for gold as a safe haven has driven demand for more places to store that gold. And it’s getting harder more difficult to find that storage, resulting in a boom of sorts in the vault business. Small investors pay up to 1% of the value of their holdings for the opportunity to store gold, while hedge funds and ETFs may pay about 0.4%, according to a report from Bloomberg.

Mega-banks, too, are building more storage space for gold. Barclays Capital, a subsidiary of Barclays PLC (NYSE: BCS), Deutsche Bank AG (NYSE: DB), J.P. Morgan Chase & Co. (NYSE: JPM), and Brinks Co. (NYSE: BCO) are all building new or expanded secure storage to hold all that yellow metal.

Adding to the demand for gold, of course, are the ETFs that purchase bullion: the SPDR Gold Trust (NYSE: GLD) and the iShares Gold Trust (NYSE: IAU). A single gold bar weighs 27.5 pounds and is 7 inches long by 3.675 inches wide by 1.75 inches high. The SPDR Gold Trust holds more than 1,250 metric tons of gold bullion in a vault owned by HSBC Holdings plc (NYSE: HBC), or about 2.75 million pounds. That’s 100,000 gold bars with a total dollar value of about $72 billion.

The world’s central banks hold more than 30,000 metric tons of gold, and the world’s gold miners added more than 400 tons to the globe’s supply of gold in the second quarter of this year. The newly-mined gold totaled the equivalent of 32,000 gold bars. Nearly 40% of that is converted into about 12,800 gold bars.

There are plenty of analysts who don’t believe the gold rally can continue. George Soros, for example, sold all his interests in both SPDR and iShares gold trusts. Warren Buffett thinks investing in gold is, at best, peculiar.

For now, though JP Morgan, HSBC, and Brinks, the three largest vault-providers in the UK are sitting pretty. Small gold investors, though, may be facing higher storage prices as insurance costs are rising. The vault owners, as you might expect, have no comment.

The obvious question, of course, is what happens to all these new vaults when investors unload their hoards of gold?

Paul Ausick

Gold Fields Increases Resource Estimate For Peru Project

LIMA -(Dow Jones)- South Africa's Gold Fields Ltd. (GFI, GFI.JO) has increased its mineral resource estimate for its 51%-owned Chucapaca gold project in southern Peru, according to a company presentation.

Gold Fields says that Chucapaca has an estimated resource of 7.6 million gold equivalent ounces, up from 5.6 million ounces reported in May 2010.

Gold Fields expects to submit the environmental impact study for Chucapaca and complete its feasibility study in the second quarter of 2012. Construction is slated to begin in 2013 with production starting in 2015.

Peruvian precious metals miner Compania de Minas Buenaventura SAA (BVN) has a 49% stake in the project.

Gold Fields only producing mine in Peru is Cerro Corona, located in Cajamarca region.

In South America, Gold Fields aims to have in development or production 1 million gold equivalent ounces by 2015.

Gold Fields is the world's fourth biggest gold producer.

Copyright © 2011 Dow Jones Newswires

Wintershall Aims To Reduce Public Concern About Shale Drilling

FRANKFURT -(Dow Jones)- Wintershall AG, a unit of BASF SE (BAS.XE), won't pursue unconventional drilling methods for natural gas against the will of the public, Wintershall chief geologist Dieter Kaufmann said at a conference Monday.

"If a project doesn't receive social acceptance, it should be terminated," Kaufmann said.

Shale drilling, which involves pumping water through layers of stone that contain gas, a process known as fracking, has increased considerably in the U.S.

In Germany, the method has raised concerns about the contamination of ground water and seen strong public protests against it.

Social acceptance of the technology should determine the amount that shale drilling can contribute to the energy mix, Kaufmann said.

Wintershall has concessions for two blocks in North-Rhine Westphalia close to a densely populated area, which run until mid-2013, and that is how long the company has to dispel public concern about the process, he said.

"We see strong opposition already in the early phase of the project," Kaufmann said.

However, if politicians at the national level decide that gas should replace nuclear energy, then there will be a different discussion at the local level, he added. He noted that Wintershall has used fracking for four decades in Germany.

Kaufmann said more environmental studies and feasibility's studies would be needed before drilling begins, and that more institutions should be brought into the approval process. This raises the cost of using such technology , but it is a price worth paying, he added.

Copyright © 2011 Dow Jones Newswires

German Companies Won't Suffer On Libya Rebuilding Plans-Report

FRANKFURT -(Dow Jones)- German companies won't be at a disadvantage to getting contracts for rebuilding Libya, despite the German government's rejection of the NATO military intervention in the country, a member of the Libyan National Transitional Council, Mansour Saif Al-Nasr, tells German magazine Focus in an interview published Sunday.

"Even though Germany was against the military action...it has accepted the provisional government," he is reported as saying. Therefore, "we can forgive and are grateful for every help," Al-Nasr says.

"The transitional government has made it clear that all the old international treaties which have been closed properly and transparently, will, in principle, continue to remain valid," he said when asked about problems with the contract extension for German oil and gas company Wintershall AG, a part of the BASF AG (BAS.XE) group.

Magazine website: http://www.focus.de

-Frankfurt Bureau, Dow Jones Newswires; +49 69 2972 5500

Copyright © 2011 Dow Jones Newswires

GM and UAW reach first labor deal since bankruptcy

By Bernie Woodall

DETROIT (Reuters) - General Motors Co and the United Auto Workers union reached a proposed contract for almost 49,000 production workers that both sides said would create new factory jobs and include profit-sharing bonuses.

Details of the tentative contract reached on Friday were being withheld until the contract could be reviewed by UAW officials at a meeting set for Tuesday in Detroit.

The proposed contract, which must be ratified by rank-and-file workers, represents the first since taxpayers bailed out GM and Chrysler Group LLC in 2009.

The proposed GM deal would move production of a new vehicle to the automaker's now-idled assembly plant in Spring Hill, Tennessee, a person with knowledge of the deal said.

The contract would also pay signing bonuses of around $5,000 for each worker, equivalent to a total cost of about $245 million for GM, the source said.

GM and the other two Detroit automakers offered one-time contract-signing bonuses and profit-sharing rather than traditional wage increases in an effort to avoid the kinds of fixed costs that contributed to the industry's near collapse two years ago.

The former Saturn plant in Tennessee had been the site of GM's experiment with a more collaborative relationship with workers based in part on the model of Japanese automakers led by Toyota Motor Corp.

GM scrapped the Saturn brand as part of its 2009 bankruptcy and the assembly portion of the plant has been shut. An engine plant at the site remains open.

The UAW chose to complete negotiations for a new contract with GM first, before reaching a deal with Chrysler and finally with Ford Motor Co, those close to the talks have said.

The talks between the U.S. automakers and the union in Detroit have played out at a time of increasing uncertainty about the strength of U.S. auto sales for the remainder of this year and in 2012, as well as concern about the risk of another recession.

"As America struggles with record levels of unemployment, we aimed to protect the jobs of our members -- to guarantee good American jobs at a good American company. And we have done that," UAW President Bob King said in a statement.

At stake in the Detroit contract talks are wages and benefits for about 113,000 unionized U.S. auto workers who have gone without a base pay increase since 2003.

Local 2250, which represents workers at GM's Wentzville, Missouri, plant, said in a notice that details on the proposed contract would go to union members there on Tuesday.

UAW spokeswoman Michele Martin said it was not clear yet when local bargaining units would complete ratification votes.

A person with knowledge of the negotiations said both GM and the union's leadership expected to complete ratification votes within a week to 10 days.

The timing is key because King and other union officials are expected to remain focused on winning approval for the GM contract before turning their attention to the negotiations with Chrysler.

The union gave up the right to strike at GM and Chrysler until 2015 under the terms of the Obama administration's funding to restructure the automakers in bankruptcy.

(Editing by Lisa Von Ahn, Andre Grenon, Steve Orlofsky and Mohammad Zargham)

America’s Poorest States

The U.S. Census Bureau released two pieces of widely followed data yesterday — one on poverty and the other on median income for 2010. The most interesting findings in this release were the state-by-state figures, especially when compared to national averages. A closer look at the statistics shows that a relatively small number of states suffer such widespread levels of low income and poverty that they skew the national numbers downward.

The national poverty rate last year was 15.1%. That is up from 11.3% in 2000 and is the highest it has been since 1993. Over 46 million people lived below the poverty line in 2010. The cut-off for that line is households of four people who made under $22,314. The other troubling news was that median income per household nationwide was an inflation-adjusted $49,445. This is about the same as in 1989 and down 2.3% from 2009. Economists fear that Americans are not consumers. It is easy to tell why when their real income has been frozen in place for more than two decades.

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The problems of poverty and low income are as much local as national. The poverty rate is 21% in Mississippi. The state also has the lowest median income at $36,850. Mississippi is among the states with the worst education systems, highest obesity levels, highest unemployment, and lowest rates of health insurance coverage. The state is an economic black hole, and it shows in the way people suffer there. And, as is true with black holes, it is nearly impossible for the residents of Mississippi to escape their difficult financial situations. There is a dearth of federal programs that target specific states and cities based on local economic need.

24/7 Wall St. reviewed census data from all 50 states on median income, poverty rates, unemployment, and lack of health insurance. We then identified the ten states that have the lowest median income. We also looked at why low-income households are concentrated in these states and what, in some cases, has been done to reverse the difficult situations.

These are the poorest states in America.

10. North Carolina

> Median income: $43,275
> Poverty rate: 16.1% (tied for 9th highest)
> Without health insurance: 16.7% (13th highest)
> Unemployment: 10.1% (9th highest)

North Carolina has one of the lowest median incomes in the country. It does not perform much better on other metrics related to poverty. There have been a number of programs implemented to help combat poverty in the state recently. One example is the No Kid Hungry program which aims to end childhood hunger in North Carolina by 2015. According to information from the program, "more than 1 in 4 children in North Carolina do not get sufficient food."

9. Alabama

> Median income: $42,218
> Poverty rate: 16.1% (tied for 9th highest)
> Without health insurance: 14.4% (21st highest)
> Unemployment rate: 10.0% (10th highest)

Alabama has one of the worst poverty rates in the country. Combined with an unemployment rate of 10% and a median income of just $42,000, state residents are in truly awful shape. While unemployment in most of the country has dropped in recent months, it has actually increased in Alabama. State Governor Robert Bentley, acknowledging the dire circumstances state residents face, has begun a "road to economic recovery" campaign aimed at creating jobs in order to pull the state out of depression. In an interview in the Andalusia Star News, Bentley says he hoped to create 10,000 new jobs by the end of the year, but that it would be challenging.

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8. Kentucky

> Median income: $42,091
> Poverty rate: 17.3% (6th highest)
> Without health insurance: 15.5% (18th highest)
> Unemployment rate: 9.5% (13th highest)

Residents of Kentucky are among the poorest in the nation, and have the 6th highest rate of poverty. One way the state works to lessen the impact of poverty is through Community Action Kentucky, an organization that provides "direct social services to Kentuckians with low and moderate incomes in all 120 Kentucky counties." The group provides services ranging from housing to employment training to Meals on Wheels. To raise awareness of community-based agencies, Governor Steve Beshear declared May "Community Action Month" this year.

7. South Carolina

> Median income: $42,059
> Poverty rate: 14.9% (16th highest)
> Without health insurance: 17.6% (12th highest)
> Unemployment rate: 10.9% (4th highest)

South Carolina has the fourth-highest unemployment rate in the country, contributing to the state’s high level of poverty and seventh-lowest median income. According to the Greenville News, Governor Nikki Haley stated: "The No. 1 key to dealing with these is training people quickly and getting them back to work." As a result, Haley is in the midst of developing a jobs training program designed to improve the readiness of the state workforce and, hopefully, drive new employers to South Carolina.

6. Montana

> Median income: $42,005
> Poverty rate: 13.4% (24th highest)
> Without health insurance: 16.3% (16th highest)
> Unemployment rate: 7.7% (18th lowest)

Aside from its exceptionally low median income, Montana does not rank particularly low on many poverty-related metrics. It also has a lower overall poverty rate than the national average of 15.1%. Times are still tough in the state. According to NBC Montana, the number of students who receive free or reduced cost lunches has increased by at least 2% each year since 2007. In some schools, the share of students receiving these benefits has exceeded 80%.

The Highest Paying Jobs With The Most Time Off

5. Louisiana

> Median income: $41,896
> Poverty rate: 18% (4th highest)
> Without health insurance: 18% (11th highest)
> Unemployment rate: 7.6% (17th lowest)

Nearly one in five people in Louisiana lives in a state of poverty. This is the fourth-worst rate in the country. A full 18% of residents are without health insurance, and median income is the fifth-lowest in the country. The after effects of Hurricane Katrina and, to a lesser extent, the Gulf oil spill, have hurt tourism and job opportunities in the region. In an effort to stimulate the state economy, Governor Bobby Jindal has proposed the construction of a new gas-to-liquids facility, which is expected to create more than 5,000 jobs: "We’re here to make an announcement that could result in Louisiana’s largest economic development project in our state’s entire history."

4. West Virginia

> Median income: $40,824
> Poverty rate: 15.7% (12th highest)
> Without health insurance: 13.9% (25th highest)
> Unemployment rate: 8.1% (tied for 24th lowest)

The percetange of West Virginia residents living below the poverty line has increased steadily since 2008. Worst still, approximately one in five West Virginia children now live in poverty. There has been an increase in the number of West Virginians with health insurance, however. This is likely due to government programs such as Medicaid and the Children’s Health Insurance Program, according to the Center on Budget and Policy, as there has been a decrease in employer-based coverage.

3. Tennessee

> Median income: $40,026
> Poverty rate: 16.1% (11th highest)
> Without health insurance: 14.7% (20th highest)
> Unemployment rate: 9.8% (11th highest)

Tennessee has the third-lowest median income in the United states, as well as some of the worst poverty and unemployment rates in the country. While speaking at the Kingsport Center for Higher Education, Governor Bill Haslan announced that the centerpiece of his job creation initiative was "setting the right environment." "It has to have a low-tax and low-regulatory environment," he continued. "We need to have elected officials who understand business."

2. Arkansas

> Median income: $38,600
> Poverty rate: 16.5% (8th highest)
> Without health insurance: 18.5% (9th highest)
> Unemployment rate: 8.2% (25th highest)

Despite an unemployment rate that is almost a full percentage point below the national average, Arkansas is one of the poorest states. The state’s median income is the second lowest in the country. Its poverty rate and the percentage of people without health insurance also place the state among the ten worst. Poverty may be even worse among children in the state. According to a recent study by the Annie E. Casey Foundation, about 27% of children in the state lived in impoverished homes as of 2009.

1. Mississippi

> Median income: $36,850
> Poverty rate: 21.3% (the highest)
> Without health insurance: 18.7% (8th highest)
> Unemployment rate: 10.4% (7th highest)

In nearly every metric associated with poverty, education, employment, health risk, and insurance coverage, Mississippi has been close to the bottom for years. The state is among the ten worst for both unemployment and health insurance coverage. It has the worst poverty rate in the U.S., and by far the lowest median income in the country, at just $36,850 — not quite half of New Hampshire’s median household income. The state was also hit hard by Katrina, including the Gulfport Harbor, which the Federal Government is allotting $500 million to help rebuild. Proponents of the project expect thousands of jobs will be created in the process.

This content was originally published on 24/7 Wall St.

Esther George Tapped as Kansas City Fed Chief

The Kansas City Federal Reserve Bank on Thursday named Esther George, a long-time bank supervisor at the institution, as its president to replace Thomas Hoenig, who is retiring.

George, who holds a master's degree in business administration, has most recently been the Kansas City Fed's first vice president and chief operating officer. She was its vice president in charge supervision and risk management from 2001 to 2009.

In 2009, George served as acting director of the Federal Reserve Board's division of bank supervision in Washington.

George, 53, will join Cleveland's Sandra Pianalto as the second woman currently serving as president of one of the 12 regional Fed banks. There are currently three women serving on the Fed board of governors, which has seven seats of which now only five are occupied.

As president of a regional Fed bank, George will participate in meetings of the policy-setting Federal Open Market Committee, but will have a vote only once every three years. The Kansas City Fed's next turn to vote will be in 2013.

George's appointment has been approved by the Fed board in Washington.

(Reporting by Mark Felsenthal, Editing by Neil Stempleeman)

Geithner urges EU to do more to solve crisis

WASHINGTON (Reuters) - Treasury Secretary Timothy Geithner on Wednesday urged European leaders to act more forcefully to solve Europe's escalating debt crisis and said they have the financial and economic capacity to do so.

"They recognize that they have been behind the curve. They recognize that it will take more force behind their commitments," Geithner told CNBC television two days before he is set to make an unprecedented appearance at a EU finance ministers meeting.

Frustrated with Greece's failure to meet fiscal goals set as a condition for a bailout, leaders of France and Germany were due on Wednesday to press Greek Prime Minister George Papandreou to enforce the harsh austerity measures.

Fears of a Greek default have shaken global financial markets. Moody's cut the credit ratings of two French banks, Societe Generale and Credit Agricole .

Moody's said it downgraded the credit rating of Societe Generale by one notch because it no longer saw the bank getting additional "systemic support" over its peers, while Credit Agricole was downgraded due to continuing concerns about its Greek exposure.

Geithner tried to shore up confidence in Europe's ability to resolve its crisis and safeguard a banking system laden with poorly performing sovereign bonds.

"There is no chance that the major countries of Europe will let their institutions be at risk in the eyes of the market. There is not a chance," he said.

The Obama administration has grown increasingly frustrated with European leaders for failing to tackle a problem that is hurting the United States' own recovery and could dim President Barack Obama's reelection prospects next year.

In a clear hardening of tone, Obama voiced skepticism about the currency zone's prospects while it lacked a common fiscal policy. He said flat-out that he did not believe measures taken so far to save Greece were working.

"You have a single currency, but you don't have a single set of economic policies, and that's created great difficulty," Obama told Spanish-language reporters on Monday. "Greece is obviously the biggest immediate problem, and they've taken some steps to slow the crisis, but not solve the crisis," he said.

EU COMMITTED TO SOLVING CRISIS-GEITHNER

German Chancellor Angela Merkel on Tuesday tried to squash talk that Greece would default on its obligations and sink the 17-nation euro zone currency area, a message Geithner tried to amplify.

Geithner is attending an informal meeting of EU finance ministers in Poland on Friday, where he is expected to urge the ministers to speed up the ratification of changes to their bailout fund.

"To solve a financial crisis, you need reforms that fix your financial system, in (Greece's) case shrink their government and make growth better over time," he said.

"It takes time and it does not work unless it's supported with money. There's just no way it works -- you can't expect anything to happen without giving them the capacity, the breathing space to be able to borrow."

(Reporting by David Lawder, Lisa Lambert, Alister Bull and Rachelle Younglai; Editing by James Dalgleish, Dan Grebler and Andrew Hay)

(Corrects to make clear that Moody's downgrade of Societe Generale was not due to its exposure to Greece)

USDA: Other E. Coli Bacteria Are Also Deadly

WASHINGTON -(Dow Jones)- The six additional types of E. coli bacteria the U.S. Department of Agriculture said Monday it will declare as adulterants and begin testing for next year in beef can be just as deadly as, and are more pervasive than, the one type--E. coli 0157:H7--it tests for now, USDA Secretary Tom Vilsack said Tuesday.

The USDA will not begin barring contaminated raw beef sold in stores until March 2012, after it has gone through the process of accepting and analyzing public comment on its plan.

It was in late 2009 or early 2010 that the rising threat of other, unregulated, types of E. coli first came to his attention, Vilsack said, and the USDA began developing the technology to conduct quick and accurate tests that could be used on a commercial scale.

Illness from E. coli 0157:H7 contamination is actually on the decline as illnesses from other E. coli are on the rise, Vilsack said.

Government data, he said, have "indicated in the last decade a 284% increase of confirmed illnesses as a result of [other E. coli bacteria] while we've seen a 27% decrease in the same period of time from [E. coli] 0157:H7."

The USDA could have begun implementing the process it began Monday much earlier, but approval of the agency's proposal got hung up at the White House Office of Management and Budget.

The USDA submitted its proposal to the OMB on Jan. 25. After a 90-day review, approval was put on hold indefinitely.

These other types of E. coli, including the six the USDA said it will add to the bacterial-adulterant list, are just as virulent as E. coli 0157:H7 and are responsible for twice as many illnesses in the U.S., Vilsack said.

"All of the [E. coli bacteria] we are talking about today are capable of killing people," USDA Under Secretary for Food Safety Elisabeth Hagen said.

The Consumer Federation of America, a nonprofit consumer advocacy and lobbing group, applauded the USDA's announcement Monday, but said it should have been done sooner.

"CFA and other consumer and public-health advocates have been urging this step for years," the group said in a statement.

The increased testing, CFA said, "will improve public health, [and]...the economic viability of the beef industry."

But industry representatives disagreed.

"Imposing this new regulatory program on ground beef will cost tens of millions of federal and industry dollars, costs that likely will be borne by taxpayers and consumers," James H. Hodges, the group's executive vice president, said Monday. "It is neither likely to yield a significant public-health benefit nor is it good public policy."

The USDA will need to spend $500,000 to $750,000 dollars a year to complete the extra E. coli testing, USDA's Vilsack said.

E. coli is especially dangerous in ground beef, Vilsack said, because it often contaminates ground beef and Americans often undercook hamburgers.

Enough heat, though, can kill the bacteria. That is why if government inspectors detect E. coli the contaminated beef must be cooked before being diverted to be included in processed food products.

Copyright © 2011 Dow Jones Newswires

U.S. Refinery Status: Planned Work Underway At Chalmette La. Refinery

The following table lists unplanned and planned production outages at U.S. refineries as reported by Dow Jones Newswires. The information is compiled from both official and unofficial refining sources and doesn't purport to be a comprehensive list.

Exxon Mobil Corp. (XOM) on Sep. 12 said planned work at its joint venture refinery in Chalmette, La., caused emissions at the sulfur plant on Sep. 11. The work is expected to continue for less than two weeks and is not expected to impact production.

PBF Energy's 193,000 barrel-a-day refinery in Delaware City, Del., experienced an emissions release of sulfur dioxide on Sep. 9 due to the shutdown, or start up, of the plant's key gasoline-making fluid catalytic cracking unit. A report by state environmental regulators said "The release of sulfur dioxide was caused during a shutdown of the catcracker unit startup."

Valero Energy Corp. (VLO) said on Sep. 9 maintenance at a hydrocracker unit at its oil refinery in Benicia, Calif., had no material impact to production. The work resulted in a release of sulfur dioxide to the plant's safety flare system, according to a filing to the California Emergency Management Agency earlier on Sep. 9.

Tesoro Corp. (TSO) on Sep. 9 said its Los Angeles-area refinery in Wilmington, Calif. was ramping towards targeted rates following an off-site power interruption the day before.

For more detailed information, search Dow Jones Newswires using the code N/REF. Operator Refinery Capacity Description Restart (in 000s bbl/day) UNPLANNED CANADA CARIBBEAN EAST COAST PBF Delaware 193.0 FCCU snag on Sep. 9 results in Energy City, DE emissions; status of unit un- clear. GULF COAST Conoco Belle Chasse 247.0 Equipment malfunction occurred on Phillips La. Sep. 4 while refinery was opera- ting at very low rates due to Tropical Storm Lee. No details were provided. Flint Corpus 300.0 Second power disruption in as Hills Christi, TX many days shut West Refinery on Sep. 4. On Sep. 3 the Mid-Plant Complex and an SRU resumed nor- mal operations after a brief power snag. Total Port Arthur 232.0 Refinery resumed normal rates TX on Sep. 7 after early-day up- set at sulfur recovery area. MIDWEST Exxon Channahon 268.0 Power failure on Sep. 3 causes Mobil IL emissions and flaring; impact on production unclear. ROCKIES Sinclair Sinclair 74.0 Refinery at reduced rates fol- WY lowing fires at CDU on Sep. 3 and Sep. 4. Repairs and damage assessments underway, the co. said on Sep.6. Exxon Billings, 60.0 Production at minimum rates due MT to ruptured Silvertip Pipeline. Company looking for alternative crude sources, the co. said on July 5. WEST COAST Tesoro Wilmington 92.0 Refinery returning to targeted rates on Sep. 9 following an off-site power outage the day before. PLANNED CANADA CARIBBEAN EAST COAST Sunoco Philadelphia 335.0 Refineries up for sale on Marcus Hook 190.0 Sep. 6; process units will be shuttered in July 2012 if no buyer is found. GULF COAST Alon Big Spring 67.0 FCCU turnaround maintenance under- TX way, a filing to environmental reg- ulators made public on July 24 said. Exxon Chalmette 192.5 Planned maintenance started Sep. Mobil LA 11 at sulfur plant; emissions re- ported to NRC. Work will end in less than 2 weeks with no impact on to production expected, to co. said on Sep. 12. Motiva Port Arthur 285.0 Expansion project to increase 1Q TX throughput capacity by 325,000 2012 b/d, to 610,000-b/d, slowed. Completion now seen 1Q 2012, from 2010. Valero Corpus 315.0 Crude & coker unit turnaround Oct. Christi, TX to start in Oct. for three 2011 weeks. Valero McKee TX 170.0 Crude Unit and FCCU to undergo 3Q 2011 turnaround maintenance for six weeks starting in Oct. 2011, the co. said on July 26. Vacuum unit turnaround planned for first half of 2012, co. said. Expansion project announced March 2011 to increase crude oil throughput by 25,000 b/d to 195,000 b/d. Valero Norco, LA 185.0 Hydrocracker project will pro- 2013 ceed and be completed in late 2013, the co. said on 7/27/10. Upgrade project to build 2012 a new diesel hydrotreater unit moved from 2010 to 4Q 2012. Valero Port Arthur 325.0 Hydrocracker project will pro- 2012 TX ceed and be completed in late 2012. MIDWEST BP Whiting, IN 405.0 Turnaround at Pipestill 12 de- layed by 3 months; it was sup- posed to begin in November, a source said on Mar 25. Cenovus Roxana, IL 306.0 Coker and refinery expansion Q4 2011 (Conoco/WRB) project on track for comple- tion 4th Q 2011, the co. said on July 26, 2011. CVR Coffeyville 115.7 Periodic turnaround will take 2012 KS place in two phases beginning in Fall 2011 and completed in Spring 2012. Husky Lima, OH 160.0 15-day isocracker maintenance to Energy replace reactor catalyst will be- gin in 3rd Q 2011. Refinery will operate at 90% of capacity during that time. 15-days of maintenance planned Autumn at aromatics unit in the fall 2012 of 2012. Husky Toledo, OH 140.0 Isocracker maintenance and gen- Energy eral maintenance for 38 days will commence in Q3 2011, the Co. said on July 28. Minor maintenance planned in 4Q 2011, the co. said on July 28; no details provided. Tesoro Mandan, ND 58.0 Total crude-oil processing capa- 2nd Q city to increase by 17% to 68,000 2012 b/d by 2nd quarter 2012. WEST COAST

Copyright © 2011 Dow Jones Newswires

Iraq's Top Energy Committee Approves Shell Gas Deal - Oil Minister

AMMAN -(Dow Jones)- A top Iraqi government energy committee has approved a deal with Royal Dutch Shell PLC (RDSA) to capture and exploit associated gas from its giant southern oil fields, the country's oil minister said Sunday.

The Iraqi oil ministry struck a deal in July with Shell and Japan's Mitsubishi Corp. (8058.TO) to develop gas production in southern Iraq. But to become valid the deal still needs approval from the Baghdad government.

"It was agreed upon by the energy committee and was sent to the cabinet for approval," Abdul Kareem Luaiby told Dow Jones Newswires on the sidelines of an Iraqi energy meeting in Amman, Jordan.

The committee is chaired by the deputy prime minister for energy affairs, Hussein al-Shahristani, and its members include the ministers of oil, electricity, and finance.

Luaiby declined to say when exactly the cabinet would approve the deal. The agreement must first be examined by the cabinet's legal and specialized offices, he said.

The 25-year venture calls for an investment of $17.2 billion to create the Basra Gas Company. Baghdad would have a 51% stake, Shell 44% and Mitsubishi 5%.

Some $12.8 billion would be spent on infrastructure and $4.4 billion on construction of a liquefied natural gas facility.

Under the agreement, the company must first meet local demand but can export any gas not used by Iraq's fuel-staved power plants. The planned LNG terminal would handle the export of 600 million cubic feet a day.

Baghdad would contribute $5.236 billion to the venture, including some $1.524 billion in existing infrastructure. Shell and Mitsubishi need to contribute nearly $7 billion, and the remaining money will be financed through the venture's returns, according to the summary submitted by Iraq's oil ministry to the country's parliament.

The joint venture would sell produced gas to Iraq's state-owned South Gas Company, at international standard pricing.

Iraq estimates it should make around $31.1 billion over the 25 years of the project from taxes, fees and raw gas sales to the joint venture, the document said.

An Iraqi oil expert, who asked not to be named, however, said Iraq would make nearly $100 billion from the venture because the gas would substitute for the oil currently used to fuel Iraq's power stations.

Iraq would tax Shell and Mitsubishi profits at 35%, he said. The expert said Shell and Mitsubishi will make a 7% profit on the whole venture.

Iraq has natural gas reserves totaling 112.6 trillion cubic feet, the 10th largest in the world. But it produces only around 1.5 billion cubic feet a day, because of a lack of infrastructure.

Copyright © 2011 Dow Jones Newswires

Greece says will stay the course, despite GDP slump

By Harry Papachristou

THESSALONIKI, Greece (Reuters) - Debt-laden Greece's government vowed on Saturday to stay the course of austerity, sending a message to its increasingly frustrated lenders it will do everything it takes to avoid a bankruptcy that would rock the euro.

Anger at the country's failure to meet fiscal targets under its EU/IMF bailout has reached boiling point, prompting senior euro zone policymakers to cast doubt on its ability to avoid default or even membership of the single currency.

But Finance Minister Evangelos Venizelos countered the talk, telling its lenders his government remained fully committed to its bailout plan.

"We are absolutely determined, without weighing any political cost, to fully meet our obligations to our institutional partners," he said in a speech in the northern city of Thessaloniki.

Venizelos pledged to further cut the civil service payroll, push privatizations and deepen labor market reform.

"If these things don't change, we won't survive, we won't get out of the crisis," he told business people in a conference.

Civil servants, who have already seen about a fifth of their wages slashed, will suffer more after the government decided to put thousands of them in a so-called "Labour Reserve," in which they will draw 60 percent of their salary and possibly face dismissal if they find no other public sector job within a year.

"We must prove wrong all those who say that Greece is incapable, or unwilling, or a pariah, or doesn't deserve to be in the euro," Venizelos said.

But austerity measures are throwing the economy into an ever deeper recession. GDP will shrink by more than 5 percent this year, Venizelos said, topping earlier projections in its third straight year of contraction.

PUBLIC DISCONTENT

Recession is breeding public discontent and thousands of disgruntled civil servants, students, taxi drivers, and even football fans, are expected to march later on Saturday in Thessaloniki.

The protests are scheduled to coincide with a major economic policy speech by Prime Minister George Papandreou at the Thessaloniki Trade Fair, the country's biggest economic event.

Taxi drivers have called a 24-hour strike. Thessaloniki restaurant owners said they would shut down on Saturday to protest a VAT hike that took effect earlier this month.

"We are suffering an unprecedented tax raid... we deeply worry about tomorrow," George Kasimatis, Chairman of Greece's Chamber of Commerce Federation, told Venizelos during the conference.

Police presence is felt throughout the city, with about 6,000 officers patrolling the streets on foot or motorbike. Three people were detained for carrying face masks.

Papandreou, who was heckled by protesting labor unionists in Thessaloniki on Friday, avoided walking through the fairgrounds in the morning, as prime ministers usually do on the event's first day.

While vowing to keep its side of the bargain, the Greek government sharply criticized its EU partners for delaying ratification of a second, 109-billion-euro bailout for the country, agreed by euro zone leaders on July 21.

"Europe must rise to the challenge and move toward implementing the July 21 decisions, to put an end to the Sissyphean ordeal the Greek people is going through," said Development Minister Mihalis Chrysohoidis.

"Doing nothing is disastrous for all of us," he added.

A G7 source said the troika (EU/IMF/ECB), which suspended talks with Athens last week in frustration at Greece's struggle to stick to its deficit reduction plan, would probably come up with a form of words in its next report to allow the next tranche of bailout funds to be paid.

But the working assumption is now that Greece will not avoid default indefinitely.

However, a bond swap plan for private bondholders, which is part of the second bailout plan and is supposed to ease Greece's debt payments was progressing well, Venizelos said.

"The private sector is responding very well to the PSI (private sector involvement)," he said without elaborating, one day after an initial deadline for banks to express interest in the scheme expired.

(Additional reporting by Yannis Behrakis; Editing by Toby Chopra)

Euro-Dollar Breakdown: The Calls For Parity Return, A Hit To GDP (UUP, FXE, EUO, FXF)

It was just under ten years ago that I was in Spain and Portugal for a vacation and a day of running with the bulls in Pampalona. Unlike most trips to Europe, there was a handy difference. The Euro cost less than $0.90 at the time. It was an extreme low and we know exactly how bad that situation eroded and the Euro reached nearly $1.60 by 2008. Now the range has been more in a level of about $1.30 to $1.50 longer-term, but today we are facing a Euro of $1.365.

This hurts exporters who sell into Europe, and if the Euro weakens too much then sales could drop enough that this would even hurt GDP. Can the Euro’s decline accidentally cause a recession as the economy weakens? It all depends upon by how much, but the answer is "Yes, at least possibly."

Now we are seeing calls for a much lower Euro as the panic builds. Whether it is Greece, Italy, Spain, Portugal, or elsewhere, the scares are still there and they are unfortunately still growing. There are no more vacation seasons for Europeans so everyone is back at work. Just on Thursday, there was an unnamed hedge fund manager calling for Dollar-Euro parity again. Almost $1.60 in 2008, now $1.365, and then $1.00?

A more sensible call in a more drawn out timeline came from Nick Bennenbroek at Wells Fargo, who said that the Euro could fall to $1.35 or $1.30 rather quickly. As far as parity, he thinks that would take a prolonged period of maybe 5 years.

Economists, exporters, investors and traders need to remember one thing here about Euro parity. When the Euro launched, the price was $1.18 rather than $1.00. Sure, the Euro fell precipitously and ended up down close to $0.80 about ten years ago at the peak. By our take, True Parity Is $1.18! The technical parity definition is $1.00.

Now that there are talks of more Greek defaults rising and CDS spreads widening out in Europe, along with central bank resignations, where this one falls is unknown. The reality is that it will overshoot at the extreme. All markets overshoot on the way up and on the way down and currencies are no different.

If you are an American, you are already "long the dollar." The way to play the currency move against a basket without leverage is the PowerShares DB US Dollar Index Bullish (NYSE: UUP). Its 52-week trading range is $20.84 to $24.02.

As far as tracking the Euro, that can easily be done with the CurrencyShares Euro Trust (NYSE: FXE) if you expect the Euro to rise or the ProShares UltraShort Euro (NYSE: EUO) is you are looking for far more downside. These are seeing higher than average trading volume as you would expect.

Switzerland is NOT the Euro, it is better. Still, the CurrencyShares Swiss Franc Trust (NYSE: FXF) is how equity investors play this who do not have currency trading accounts. That is down under $112.00 per share now, and the 52-week trading range is $96.92 to $139.91.

The good news is that Americans can finally travel to Europe again without having what feels like an idiot tax because the currency is so weak. The bad news is that this is likely to hurt exports to Europe, and that can have GDP ramifications if it gets too bad.

JON C. OGG

Lawmakers Seek 'conforming' Loan Limit Extension

WASHINGTON - Butting heads with the Obama administration, a group of 37 lawmakers on Thursday called for a short-term extension of regulations that would allow the maximum size of loans that can be guaranteed by government controlled mortgage giants Fannie Mae and Freddie Mac remain at the current level of $729,750. Without action by Congress, the limit on loans that Fannie and Freddie can guarantee will drop back to a maximum of $625,500 effective Oct, 1. The group, led by Rep. Gary Ackerman (D., N.Y.), sent a letter to top lawmakers on the House Appropriations committee urging them to attach a provision accomplishing that to must-pass, so-called continuing resolution bill, a temporary funding measure that would keep the government running when the fiscal year 2012 begins on Oct. 1. The request goes against a Treasury recommendation made in February seeking that Congress not pass new legislation continuing the current level.

Copyright © 2011 MarketWatch, Inc.

GRAIN HIGHLIGHTS: Top Stories Of The Day

TOP STORIES:

Cropcast Projects US Corn Output Will Drop 4.3% From 2010

CHICAGO -(Dow Jones)- Cropcast Ag Services, a well-known agricultural weather firm, projected U.S. farmers will harvest 4.3% less corn than last year due to poor weather.

STORIES OF INTEREST:

UPDATE: Egypt's GASC Buys 300,000 Tons Russian, Kazakh Wheat

CAIRO (Dow Jones)--Egypt's state-owned wheat buyer, the General Authority for Supply Commodities, Wednesday said it bought a total of 300,000 metric tons of Russian and Kazakh wheat for shipment Nov. 11-20.

CWB Funding Grain Research At University Of Saskatchewan

WINNIPEG (Dow Jones)--The Canadian Wheat Board is investing C$500,000 at the University of Saskatchewan into research on how to improve Canadian grain production.

StatsCan Appears To Underestimate Canada's Year Ago Canola Output

WINNIPEG (Dow Jones)--The grain and oilseed stocks in all positions report released Wednesday by Statistics Canada confirmed larger than expected supplies for canola and all wheat and suggests that the government agency may have underestimated the size of those crops during the 2010-11 August to July season, industry sources said.

MARKETS

US GRAIN AND SOY REVIEW: Wheat Prices Drop On Weak Demand

CHICAGO (Dow Jones)--U.S. wheat futures fell Wednesday as Egypt, typically the world's largest importer of the grain, made a large purchase from other countries.

US CASH GRAIN: Basis Slipping Ahead Of Harvest

CHICAGO (Dow Jones)--U.S. cash grain and soybean basis levels continue to erode, as grain buyers are comfortable awaiting supplies from the autumn harvest.

andrew.johnsonjr@dowjones.com

Copyright © 2011 Dow Jones Newswires

Venezuela Seeks To Increase Iron Output With Help From China

CARACAS -(Dow Jones)- Venezuela hopes to improve its production and transport of iron after signing three agreements with Chinese companies, state media reported Tuesday.

According to the Venezuelan News Agency, the contracts include the purchase of mining equipment, the expansion of a port in the state of Bolivar and the enlarging of a shipping lane in the Orinoco River. The deals were inked on Monday, state media said.

According to Basic Industries and Mining Minister Jose Khan, the work encompassed by the agreements will be completed in roughly 18 months, state media reported. The accords, between the South American country and Wuhan Iron & Steel Group, China Railway Group and China Communications Construction Co., are valued at $473 million, according to the government release.

Copyright © 2011 Dow Jones Newswires

ECB's Trichet convinced Greece will take action

By Daniel Flynn and Vicky Buffery

PARIS (Reuters) - ECB President Jean-Claude Trichet said on Monday he was convinced the Greek government would take the decisions required to keep its EU-IMF bailout on track, but it had very little time to do so.

Trichet also admitted there were differences between the European Central Bank experts and International Monetary Fund (IMF) on the recapitalization needs of European banks, after IMF officials estimated a capital shortfall of 200 billion euros.

Officials from the ECB, IMF and European Union interrupted talks on a new aid tranche for Greece on Friday due to disagreements over why Athens had fallen behind schedule in cutting its deficit.

Trichet said the troika officials, who are due back to Athens in mid-September, had given Prime Minister George Papandreou's government the time needed to take decisions to keep its EU-IMF bailout program alive.

"Time is obviously extremely short for Greek government to take the decisions required by the current circumstances," Trichet said during a long interview on LCI television.

"The Greek government understands the message and will do what is needed to achieve the objectives that have been set."

Greece, which sees the deficit at about 8.1 percent of GDP, blames the fiscal slippage on a deeper-than-expected recession.

Greek officials said on Monday they were confident they would clinch the next 8 billion euro installment of EU-IMF funds, due in mid-September. Athens faces no immediate danger of bankruptcy though it must repay about 10 billion euros of debt, but any delay to the aid could jolt the financial markets.

"We are just asking them to put into practice what has been agreed up, nothing more," Trichet said. "They were spending more than they were earning and that couldn't go on ... There is still the time to return to a normal situation, (but) the measures still need to be adopted."

Turning to the health of Europe's banks, he said that ECB experts disagreed with the IMF's methodology for assessing their capital requirements.

Asked if banks' funding needs were in line with the IMF's reported 200 billion euro assessment, Trichet replied: "There is a very important disagreement on the methods for calculating the capital needs...I am convinced that the final IMF figure will not be that."

Trichet also repeated a call, which he made earlier on Monday alongside his future replacement Mario Draghi, the governor of the Bank of Italy, for euro zone states to quickly implement a decision to strengthen the region's EFSF bailout fund, agreed in July.

(Reporting by Daniel Flynn and Vicky Buffery; editing by Carol Bishopric)

German FDP calls delay in Greek talks blow to euro

BERLIN (Reuters) - The interruption of talks between Greece and international lenders on a new aid tranche is a blow to the stability of Europe's currency, the deputy leader of Germany's junior coalition partners said on Saturday.

Christian Lindner, general secretary of the Free Democrats, (FDP) junior coalition partners in Chancellor Angela Merkel's center-right government, said Athens was endangering European solidarity.

"The breakdown of talks between the Troika and Greece is a blow to the stability of the euro," he said at a news conference in Berlin.

Referring to Greece's failure to meet deficit targets set in exchange for a second bailout package, Lindner said Athens was shirking responsibilities to which it had agreed.

"This is not about non-binding statements of intent, but contractually secured reciprocity for the emergency loans," he said. "We insist these agreements are observed."

Talks between Greece and the EU, IMF and ECB were put on hold on Friday after disagreement over why Athens has fallen behind schedule in cutting its budget deficit and what it must do to catch up.

The unplanned early departure of senior inspectors from the three bodies showed tension between Athens and its lenders over reforms, as clouds gathered over the second bailout package aiming to pull the country out of a severe debt crisis.

The pro-business FDP styles itself as a defender of the German taxpayer, a stance Lindner reiterated in his statement over Greece.

"Taxpayers in Northern Europe and especially Germany cannot accept inability or reluctance. In the eyes of the FDP, Greece must reaffirm it will for stability and reform."

(Reporting by Brian Rohan)

Apache Strikes Deal For Onshore New Zealand Exploration

--Apache will pay for exploration on more than 1 million acres on New Zealand's North Island

--TAG Oil holds 100% working interest on tracks, will cede stake to Apache as exploration phases are completed

--Apache will pay up to $100 million to meet its obligations in pact

--TAG says East Coast Basin holds equivalent of an estimated 1.7 billion barrels of oil, with potentially more locked in deep shale formations

(Adds background in paragraphs four through eight. Updates share prices in last paragraph. Adds New Zealand production data in paragraph 13.)

HOUSTON(Dow Jones)--Apache Corp. (APA) has struck a pact with Canadian oil and gas producer TAG Oil Ltd. (TAO.T) to explore more than a million acres on New Zealand's North Island.

TAG holds a 100% working interest in more than 1.7 million acres in New Zealand's East Coast Basin. The Vancouver company says its acreage potentially holds the equivalent of 1.7 billion barrels of oil in conventional reservoirs and could produce even more from deeply buried oil-bearing shale formations.

"We like the prospectivity and the opportunity," said Apache spokesman Patrick Cassidy. "It looks to be unconventional and we can bring value to those assets."

Houston-based Apache is among the U.S. companies that have pioneered using unconventional drilling techniques to extract vast reserves of oil and gas from onshore shale formations. By combining horizontal drilling techniques with a rock-cracking process called hydraulic fracturing, or fracking, producers have unleashed vast reserves of oil and natural gas from deeply buried rock formations in the U.S.

Now producers are taking those techniques global.

In April the U.S. Energy Information Administration estimated that natural gas-bearing shale formations in 32 countries contain about 5,760 trillion cubic feet of technically recoverable gas. That's nearly seven times the amount present in the U.S., where the glut of shale gas has depressed prices to around $4 per million British thermal units, less than half the price seen three years ago.

New Zealand was not part of the EIA's study.

Apache has been an early mover among U.S. companies carrying shale drilling abroad. Last month Halliburton Ltd. (HAL), which is a leading provider of fracking services in the U.S., helped Apache complete South America's horizontal first shale well in Argentina.

In New Zealand, Apache has agreed to pay for the collection of two- and three-dimensional seismic data in the basin in exchange for stakes in the properties as well as exploratory drilling if the seismic data suggests doing so.

TAG said in a news release that the exploration work would be conducted over the next four years, with seismic operations beginning this month and drilling expected to start in early 2012.

The work, which will be done in three phases, could eventually yield Apache a 50% interest in the acreage, TAG said. If the exploration reaches that point, it will have cost Apache $100 million.

Exploration and development beyond that would then be shared equally by both companies, TAG said.

While New Zealand meets its own natural gas needs, it is currently an importer of oil, according to the EIA. In 2009, the most recent year for which data is available, the country imported about 60% of the nearly 151,000 barrels of oil it consumed each day, according to the EIA.

Shares of Apache recently traded 3% lower at $98.70 amid broad market declines. TAG shares, which trade on the Toronto Stock Exchange, were recently up 7.2% at C$7.62.

Copyright © 2011 Dow Jones Newswires

British American Tobacco Buys 170,000 Own Shares To Hold In Treasury

LONDON -(Dow Jones)- British American Tobacco PLC (BATS.LN), said Friday it purchased 170,000 of its Ordinary shares of 25 pence each, adding that The Company intends to hold these shares in Treasury.

MAIN FACTS:

-The average price was 2,769.7024 pence per share.

-The highest price paid was 2,800 pence per share and the lowest price paid was 2,754.5 pence per share.

-Following the purchase of these shares, the Company holds 49,049,554 of its shares in Treasury.

-The Company has 1,976,921,221 ordinary shares in issue excluding Treasury shares.

Copyright © 2011 Dow Jones Newswires

MARKET SNAPSHOT: U.S. Stocks Falter Ahead Of Jobs Report

NEW YORK (MarketWatch) -- U.S. stocks declined on Thursday, folding after a four-session winning streak, with Wall Street wary ahead of the next day's monthly jobs report.

"People are hesitant to make big bets today right in front of the big payrolls report tomorrow," said Alan Skrainka, chief investment officer at Cornerstone Wealth Management.

Stocks resumed their decline after briefly rallying as weekly jobless claims fell and a gauge of manufacturing came in better than feared, lessening concerns about the direction of the economy.

After climbing 103 points and falling as much as 88 points, the Dow Jones Industrial Average (DJI) lately was down 90.21 points to 11,523.32.

The Standard & Poor's 500 Index (SPX) fell 11.47 points to 1,207.42, with financials hardest hit and consumer staples faring best among its 10 industry sectors.

The Nasdaq Composite (RIXF) declined 28.69 points to 2,550.77.

All three indexes advanced on Wednesday, the final trading session for August, with the S&P 500 down 6% for the month, the worst since the 'flash-crash' induced decline in May 2010 and worst August in a decade.

"Market valuations, such as the P/E ratio, fell to the lowest levels only seen during bear market bottoms," according to Marc Pado, U.S. market strategist at Cantor Fitzgerald.

For every stock rising more than two fell on the New York Stock Exchange, where 658 million shares traded as of 3 p.m. Eastern.

"In a relatively shocking turn of events, the ISM index held above 50," Dan Greenhaus, chief global strategist at BTIG LLC, wrote in an emailed note after the Institute for Supply Management's factor index fell to 50.6 in August from 50.9 the prior month.

The Labor Department reported applications for initial unemployment benefits last week fell by 12,000 to 409,000.

Perspective

The stock market's recent show of resilience is largely due to current valuations, which took a large hit during the five-week correction that had the S&P 500 tumble 13%, with investors currently paying less for equities on an earnings-per-share basis than they did following every recession since Ronald Reagan was president, said Skrainka at Cornerstone Wealth Management.

The trailing price-earnings ratio currently resides at 3.5% less than the average PE during the 10 recessions since 1949, and at a level last reached in 1982, the worst recession in the period after World War II "when we also had double-digit inflation," Skrainka said.

The factors underlying the low valuations include worries that deficits are going to be an enormous burden on the U.S. economy, that European banks are a crisis waiting to happen, and that the U.S. economy is headed toward a double-dip recession.

"That's the story line. But amateurs listen to stories, while professionals do the math. When I say the economy is healing, people say 'you've got to be kidding,' but I pull the numbers out, and yes it's a slow, stubborn recovery," but nowhere near as dire as many believe, said Skrainka, who adds U.S. economic growth, housing starts, auto production and employment are all much improved over where they stood in March 2009.

Copyright © 2011 Dow Jones Newswires